AGM Statement

Associated British Foods PLC
05 December 2003


5 December 2003

                          Associated British Foods plc

                 Annual General Meeting - Chairman's Statement


Here follows the text of the Chairman's statement made at the AGM on Friday 5th
December 2003.



First, a look back at the past year's results.  Adjusted operating profit rose
by 14%; adjusted earnings per share and dividends by 10%.  Free cash flow after
payment of dividends but before acquisitions and disposals totalled £292
million.  These results in highly competitive markets with little, if any, price
inflation represent another year of very sound progress.



Just in case you are worried that self congratulation may be the forerunner of
complacency, let me assure you that is not the case.  The management team are
well aware that continuing progress depends on their efforts in the short term
to deliver value to our customers, whilst also implementing the actions required
to position our businesses for long term development.



What has been achieved in the past year is a very good illustration of the twin
effects of short term performance and long term development.  Our longer
standing businesses increased their overall profits.  This was achieved while
absorbing larger restructuring costs than the previous year, increased pension
contributions and setbacks (some of them due to cyclical pricing issues) in one
or two businesses.  Meanwhile, the results from two sizeable acquisitions in the
second half of 2002, Mazola Corn Oil in the US and Ovaltine worldwide, made a
substantial contribution to our results.



It is the combination of continuing profit growth in existing businesses with
the contribution from new businesses which has been the basis of the year's
success.  The difficulties of integrating new businesses should never be
underestimated particularly when there are numerous locations in many countries
as with Ovaltine.  It is particularly satisfactory that the two major
acquisitions have been integrated in accordance with plan and on schedule.



The effect of these acquisitions has been to increase the proportion of our
profits generated from grocery products, many of them well known brands.  A
further effect has been to broaden the geographic spread of our profits, Mazola
being wholly North American and some 90% of Ovaltine being outside the UK.



A third of ABF's operating profits last year were generated from grocery
products.  This compares with a quarter only two years previously.  You will
know of the many famous brands your company owns.  It is these, together with
the own label goods we supply, which form this vital part of our business.



Increasingly, it is the well known brands which are the key to our grocery
profits.  A brand is established when it is the consumer's product of choice:
when you look for Twinings rather than another tea or infusion.



In the great majority of its markets Ovaltine, or Ovomaltine as it is called in
many markets, is noted as a key to nutrition or as an energy drink.  The markets
in Asia account for over a third of sales.  In the first nine months of our
ownership, sales there grew by 15% compared with the previous year.  Our
speciality hot beverages business comprising Twinings and Ovaltine is well
placed for further growth across the world.



In Australia, Tip Top continues to be Australia's No.1 food brand and with our
other bread brands holds 41% of the branded bread market.  It too is extending
its brand range as is Ryvita, the UK's leading crispbread manufacturer.  There
are many other brands which are well known in their particular market.



Primary food and agriculture remains the largest part of the group.  The results
were good, particularly in view of the cyclical price pressure in the overseas
sugar businesses.  Continued management attention is given to the effectiveness
of the whole business process, not just production efficiency which has been
further improved in the year.  We work closely with farmers, whether as growers
of the raw materials in our processes or through developing supply chain
partnerships in our animal feed businesses based on our procurement and
nutritional expertise.



Internally generated growth backed by investment in facilities is the most
valuable type of growth.  There is no better example than the success of Primark
our clothing retail business.  Sales were up by 15%.  This included 7% growth in
like for like sales, well above the performance of most of its competitors.
Margins were also improved and operating profits rose by 21% in the year.



By any standards, Primark's performance has been excellent.  It is based on
offering customers an increasingly wide range of attractive goods at keen
prices.  There is still plenty of scope for new sites in the UK and extending
space at existing locations.   Large parts of the UK population do not have easy
access to a Primark store.  Opportunities to acquire new sites are being pursued
but not at the expense of quality.



If you follow press and analysts' comments on the company's prospects, you may
have seen speculation about the impact of the impending review of the European
Union's sugar regime.  This is an issue, as the profits from British Sugar
remain the largest source of profit for ABF.  However, changes to the sugar
regime will not have an impact until at least 2006/7.   The effect on British
Sugar will not be as good as we would like, not as bad as people expect and it
will all take a lot longer than some people think.



British Sugar is the most efficient producer in Europe.  We are confident that
there will continue to be a profitable role for it in future whatever the shape
of the EU regime.



Five years ago, profits from British Sugar accounted for almost 50% of your
company's group operating profits.  It has been part of ABF's strategy in recent
years to reduce that proportion which is now substantially lower.  This is not
because British Sugar's profits have reduced but because profits from ABF's
other businesses have grown.  That growth has been partly internal from existing
businesses and partly from investment in acquisitions.  We expect that process
to continue.  So, if and when British Sugar's profits do decline, they will form
a progressively smaller proportion over time.  In the meantime the cash flow
from British Sugar will enable us to extend its record of improving efficiency,
while also helping to fund investment elsewhere in the group.



That process of investment in developing ABF's businesses and adding to them by
appropriate acquisitions will continue.   £578m of capital expenditure has been
made in the past three years.  £163m of that has been in Primark's store
development.  More than £600m has been invested in acquisitions.  This has been
funded largely from the group's cash flow.  Continuing positive cash flow and
the strong cash reserves we hold at present will enable us to fund the
investment over the next few years which will ensure your company remains a
strong force in its chosen markets.



All of our business sectors have opportunities for expansion, many by
acquisition.  Your company has the resources to back that expansion.



In the weeks leading up to our meeting today, there have been signs of improving
economic conditions in many of the countries where we operate.  It is too early
to say whether this trend will continue into the longer term and there are many
factors which could impact negatively:  the levels of consumer debt and the
impact of terrorist activity are just two examples.



General economic conditions are just the environment in which our businesses
operate.  The specific markets are, without exception, highly competitive.
Consumers demand, rightly so, top and improving quality, keen prices and good
service.  All our businesses face competitors who would benefit at our expense
if we were to fail to deliver value.



These are the facts of modern business life.



I believe your company is well placed to prosper nonetheless.  Its great
financial strength gives the ability to invest in building successful businesses
for the long term and also to take advantage of investment opportunities as they
are available.  ABF's management team, lead by Peter Jackson, has the abilities
to capitalise on these strengths.



Trading in the early part of the current year is running satisfactorily ahead of
last year.  Our budgets are set for further progress, which we are well placed
to deliver.





For further information please contact:

Associated British Foods:                         Tel: [phone]
Peter Jackson, Chief Executive,
John Bason, Finance Director
Geoff Lancaster, Head of External Affairs

Citigate Dewe Rogerson:                           Tel: [phone]
Jonathan Clare,
Chris Barrie,
Sara Batchelor


                      This information is provided by RNS
            The company news service from the London Stock Exchange